{"id":1004812732,"date":"2026-09-22T09:48:29","date_gmt":"2026-09-22T17:48:29","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004812732"},"modified":"2026-09-22T09:52:23","modified_gmt":"2026-09-22T17:52:23","slug":"is-the-fed-the-long-bonds-worst-enemy","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/is-the-fed-the-long-bonds-worst-enemy\/","title":{"rendered":"Is the Fed the Long Bond\u2019s Worst Enemy?"},"content":{"rendered":"
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Dillon Freeman<\/figcaption><\/figure><\/div>\n\n\n

The 10-year Treasury is approaching 5 percent, and the 30-year is well above 5 percent. For anyone financing real estate or other long-lived assets, the consequences are showing up quickly in mortgage rates, debt service, valuations and available loan proceeds.<\/p>\n\n\n\n

Inflation has reaccelerated, the market has repriced the expected path of short-term rates, federal borrowing remains enormous and long-term sovereign yields have been rising in other developed markets as well. The Fed’s July Monetary Policy Report showed headline PCE inflation at 4.1 percent year over year through May and core PCE at 3.4 percent.<\/p>\n\n\n\n

And in late 2025, the Federal Reserve started increasing its Treasury holdings again while deliberately concentrating essentially all of that incremental demand at the shortest end of the curve.<\/p>\n\n\n\n

The question is whether that decision is now making an already difficult long-term rate environment worse.<\/p>\n\n\n\n

What changed in December<\/h2>\n\n\n\n

The Fed spent more than three years shrinking its balance sheet through quantitative tightening. By late 2025, however, officials determined that reserves had moved toward the level they considered ample. QT ended effective Dec. 1, and the Fed subsequently began Reserve Management Purchases, or RMPs, to maintain enough reserves in the banking system to preserve control over short-term interest rates.<\/p>\n\n\n\n

The important detail is what the Fed authorized itself to buy.<\/p>\n\n\n\n

RMPs are limited to Treasury bills and, if necessary, other Treasury securities with three years or less remaining maturity.<\/p>\n\n\n\n

Reserve-management purchases are supposed to accomplish the narrower objective of maintaining ample reserves by focusing on the T-bill market.<\/p>\n\n\n\n

As a result, the expansion of the Fed’s Treasury portfolio since late 2025 has overwhelmingly occurred at the short end.<\/p>\n\n\n\n

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CPE Capital Markets Newsletter<\/h2>\n\n\n\n

Executive Editor Therese Fitzgerald delivers the capital markets intel that moves the needle.<\/p>\n<\/div><\/div>\n<\/div><\/div>\n\n\n\n

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